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Lockheed Martin Wins $18M Deal to Support the F-35 Program

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Lockheed Martin Corp’s (LMT - Free Report) ) Aeronautics Division recently secured an $18.5-million modification contract for providing system engineering analysis activities to further include programmatic and logistics tasks. These will analyze the F-35 aircraft system's ability to meet future operational requirements, investigate cost and weight reduction program options, and conduct modeling and simulation activities. The contract was awarded by the Naval Air Systems Command, Patuxent River, Maryland.

Additional assessments, including operational readiness, reliability, and air system design and configuration, may also be provided on requirement. Work related to the deal will be executed in Fort Worth, TX and is expected to get completed in December 2019.

F-35 Program Attributes

The F-35 aircraft is being used by the defense forces of the United States and 11 other nations, largely due to its advanced stealth, integrated avionics, sensor fusion, superior logistics support and powerful integrated sensors capabilities.

What Favors Lockheed Martin?

The F-35 program, being Lockheed Martin’s largest program has generated 27% of its total consolidated net sales in third-quarter 2018. Further, the company’s Aeronautics division generated solid year-over-year revenue growth of 19.6%, primarily driven by higher net sales for the F-35 program along with its other major aircraft programs. Considering the latest contract win that offers an all-encompassing support for the upgrade of the F-35 aircraft, we may expect the Aeronautics unit to reflect similar solid performance in the upcoming quarterly result.

Moreover, production of F-35 is expected to rise in the years ahead, given the U.S. government’s current inventory objective of 2,456 aircraft for the Air Force, Marine Corps and Navy along with commitments from the company’s current eight international partners, overseas customers and rising global demand. Undoubtedly, such massive rise in projections will increase demand for Lockheed Martin’s technical expertise on different air programs, which, in turn, will have a favorable impact on its profits.

Price Movement

Lockheed Martin’s stock has declined 5.3% in the past year against the industry’s gain of 2.9%. The underperformance may have been caused by the intense competition the company faces in the aerospace-defense space for its broad portfolio of products and services, both domestically and internationally.


 

Zacks Rank & Other Key Picks

Lockheed Martin currently carries a Zacks Rank #2 (Buy).

A few other top-ranked companies in the same sector are Aerojet Rocketdyne Holdings . Raytheon Company and The Boeing Company (BA - Free Report) .

While Aerojet Rocketdyne sports a Zacks Rank #1 (Strong Buy), Raytheon and Boeing carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne came up with average positive earnings surprise of 19.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 43.3% to $1.82 in the past 90 days.

Raytheon delivered average positive earnings surprise of 6.71% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 1.7% to $10.10 cents in the past 90 days.

Boeing delivered average positive earnings surprise of 28.01% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 3% to $15.05 in the past 90 days.

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